Acquisition is part of ongoing effort to become a one-stop shop for identity needsBy Jennifer Slattery, Contributing Editor

The acquisition of Toronto-based Bioscrypt Inc. is the latest purchase for the Stamford, Conn.-based company, L-1 Identity Solutions. Over the years the company also acquired Viisage, Identix, Integrated Biometric Technology, SecuriMetrics, Iridian, SpecTal, ComnetiX, McClendon and Advanced Concepts Inc. “L-1 is the first true consolidator to emerge in the biometrics and identity space,” says Jeremy Grant, senior vice president and identity solutions analyst at the Stanford Group Company.

L-1’s all-stock purchase of Bioscrypt is estimated to cost the company $43.8 million and is expected to be approved by Bioscrypt’s board of directors by the end of March.

The acquisition will increase L-1’s product offerings in the fingerprint physical access control market. Bioscrypt has more than 400 global customers and an installed base of more than 260,000 access control units. Customers include Kronos, Honeywell, Lenel and ADI. Identix, one of L-1’s previous purchases, had competed against Bioscrypt in the physical access control markets but exited the market, Grant says.

Bioscrypt also has one of four fingerprint scanners that has been approved by the Transportation Security Administration for use in airports for access control.

Grant says Bioscrypt’s 3D facial recognition technology is one that has “impressed” him. 3D facial recognition uses infrared light to scan an individual’s face and maps the contours. Theoretically it addresses some of the limitations of standard 2D facial recognition. The Venetian Macao-Resort Hotel has deployed the technology for employee access control.

Bioscrypt’s VeriSoft security software is now included on more than 20 million Hewlett-Packard computers.

The addition should help Bioscrypt expand its product presence, says Matthew Bogart, vice president of marketing at Bioscrypt. “L-1 helps us advance our business significantly. We will be able to have expanded product offerings beyond just biometrics and multi-factor authentication.”

L-1 appears to be setting itself up as an identification super power, but the company still faces some opposition, Grant says. “L-1 faces stiff competition, both from other biometric and identity vendors, as well as from major systems integrators that are in the midst of assembling their own integrated identity platforms,” he says.

Grant predicts 23% compound annual growth for U.S. government spending on identity systems between fiscal years 2007 and 2009. “Growth in identity and biometrics solutions will be significant over the next ten years as dozens of countries, states and localities implement enterprise-class systems,” he says. “Outside the United States, major projects are going forward in the areas of national ID cards, ePassports and visas, voting, law enforcement and border management.”

L-1 has been active with a number of contract wins. The company recorded orders of more than $60 million, including $6.3 million in purchase orders from the Department of State for passport printers, and a $3.7 million deal to modernize Panama’s National and Voter Registration ID system. L-1 declined to be interviewed for this story.